The SDLT penalty regime has changed. In general terms, there is now a tougher approach, but this is counter-balanced by an important new defence of having taken ‘reasonable care’.

The old rules on SDLT penalties apply to SDLT returns with a filing date prior to 1 October 2009. Given the 30-day filing period for SDLT returns, this means the old rules apply to land transactions with an ‘effective date’ prior to 2 March 2009. However, the new regime applies to SDLT returns with a filing date on or after 1 April 2010 (ie an effective date on or after 2 March 2010).

The HMRC has given guidance on how to cope with the increase in the VAT rate (from 17.5% to 20%) on 4 January 2011, in so far as it applies to non-residential leases:

leases granted on or after 27 July 2010: the SDLT calculation of the net present value of the lease should take account of the January increase. Typically, therefore, the value will be calculated with 17.5% VAT for rents due on the September and December quarter days, but at 20% for rent due on subsequent quarter days;

Group relief for SDLT can apply when land transactions take place between members of a group of companies (one is a 75% subsidiary of another, or if both are 75% subsidiaries of another). However, group relief only applies if there is a ‘company’, which is defined as a ‘body corporate’.

The First-tier Tribunal has held that a reverse premium was subject to VAT. In the particular facts of the case there was no consideration given for the assignment, and therefore it could not be a taxable ‘supply’.

A reminder of the tax reliefs available for development land.

What is the SDLT position if T is holding over on the expiry of an LTA 1954 business tenancy? The answer will depend upon whether the original lease was liable to stamp duty or SDLT (for most purposes this will be a lease granted on or after 1 December 2003):

There were two main changes to SDLT announced in the Budget:

for first-time buyers there is nil rate up to £250,000 (provided the buyer intends to live in the residential property). This relief is limited to a two-year period from 25 March 2010.

The exercise of an option to tax (sometimes called the election to waive the exemption) has important consequences for the ability of a landowner to recover its input tax. If a landowner intends to make supplies of land or buildings that will be an exempt supply for VAT purposes (as will ordinarily be the case), it can exercise an option to tax. The effect of that option is to turn what would have been an exempt supply into a taxable, standard-rated, supply.

If a buyer agrees to pay the seller’s legal fees, then those fees (plus VAT) should be included when working out the chargeable consideration for SDLT purposes.

A reminder that HMRC changed banks last year (it now banks with Citi and RBS). Thus, all the sort codes and account numbers have changed, although HMRC is temporarily continuing to accept payments to its old Bank of England account.

There has been an obligation on promoters of schemes designed to avoid SDLT to provide details to HMRC since August 2005. However, those disclosure requirements only applied to commercial properties. Now, however, the regime extends to residential transactions as well.

Useful changes were made to the options to tax rules on 1 April:

The arguments rumble on as to the extent to which goodwill should be subject to SDLT. An article in the Gazette makes the point that goodwill is not an estate, interest, right or power in or over land, and nor is it an obligation, restriction or condition affecting the value of the estate – and thus it should not come within the scope of SDLT (under FA 2003).